A Policy Model for the Livestock and
Poultry Sectors of Mexico
Chad Barrett and Jacinto E. Fabiosa
Technical Report 98-TR 39
June 1998
Center for Agricultural and Rural Development
Iowa State University
Ames, IA 50011-1070
and
Food and Agricultural Policy Research Institute
Iowa State university
Ames, IA 50011-1070
Chad Barrett is a CARD graduate research assistant: and Jacinto Fabiosa is a CARD/FAPRI
assistant scientist.
This material is based upon work supported by the Cooperative State Research Education and
Extension Service, U.S. Department of Agriculture, under Agreement No. 96-34149-2533. Any
opinions, findings, conclusions, or recommendations expressed in this publication are those of
the authors and do not necessarily reflect the view of the U.S. Department of Agriculture.
A POLICY MODEL FOR THE LIVESTOCK AND
POULTRY SECTORS OF MEXICO
Geographic, demographic, economic, and political factors help to make Mexico a
potentially major player in the world livestock and poultry product markets in the next
decade. Mexico has 20 percent of the population of the United States but only 6 percent
of the arable land mass of the United States (Hadwiger and Lee 1994). It should be
noted, however, that irrigation practices could increase Mexico’s land mass by as much
as 30 percent. This, combined with increasing demand for meat, particularly from the
growing middle class, makes it likely that Mexico will play a major role in the
international livestock and poultry markets.
Two important demographic factors contribute to strengthening Mexico’s demand
for meat products. First, more than 50 percent of Mexico’s citizens are below 25 years of
age. This fact favors Mexico’s trend toward more imports because younger generations
are more willing to try imported products. Second, 39 percent of the population has
monthly household income of more than $500 per month. This group of more than 35
million people are considered to be potential customers for meat products. Furthermore,
Mexico’s participation in world markets is expected to expand as its government directs
its programs and goals toward stimulating agricultural exports as a way for Mexico to
acquire development capital (Hadwiger and Lee 1994). Finally, Mexico’s signing of the
North American Free Trade Agreement (NAFTA), which phases out and eliminates many
agricultural tariffs and quotas among Canada, Mexico, and the United States, will hasten
Mexico’s integration into the world market.
NAFTA eliminated import duties of 25 percent for frozen beef and 20 percent for
chilled beef on January 1, 1994. This agreement also phases out import tariffs by 2
percent per year for beef variety meats and all pork products, allowing free trade with
NAFTA countries by 2003. Indeed, the Food and Agricultural Policy Research Institute
(FAPRI) baseline projects that Mexico will be a strong importer of beef, pork, and
poultry over the next decade (FAPRI 1998). FAPRI projects that Mexico will import
2 Barrett and Fabiosa
450 thousand metric tons of beef, 57 thousand metric tons of pork, and 288 thousand
metric tons of poultry by 2007.
This report documents the development of the FAPRI model of Mexico’s
livestock and poultry sectors. Beef and cattle, swine and pork, and broilers are the
sectors included in this model. This model is used in conjunction with the other country
models in FAPRI’s international livestock and poultry modeling system to analyze the
impacts of agricultural policy changes.
The next section of this report provides a brief overview of Mexico’s livestock
and poultry sectors, followed by a description of the model’s structure, specification,
estimation, and validation. This document then presents some of the results from the
1998 FAPRI baseline and concludes with a comparison of the new FAPRI Mexico model
to the previous FAPRI Mexico model.
Mexico’s Livestock Sectors
Beef and Cattle
Beef is still considered a semiluxury commodity that is consumed mostly by the
middle- and upper-income households in Mexico. Per capita consumption of beef in
Mexico has remained very stable at approximately 20 or 21 kg/person on a carcass basis
since 1991 (FAPRI 1998). This is considerably lower than the U.S. average of 30.5
kg/person on a retail basis over the same period (FAPRI 1998).
Pastures conducive to cattle production comprise nearly 60 percent of Mexico’s
total agricultural land. Beef production is evenly distributed among the northern, central,
and southern regions, which produce 34, 36, and 30 percent of Mexico’s beef,
respectively (Bierlen and Hayes 1994). Table 1 provides inventory figures, production
rates, shares of slaughter, and supply and demand figures for Mexico’s cattle-beef sector
for 1985 through 1997. Mexico’s total cattle inventory averaged 33.62 million head
between 1985 and 1990. This average inventory fell to 29.52 million head between 1991
and 1997. Mexico’s other cattle inventory accounted for this decline, as its average
dropped from 19.56 million head to 15.27 million head over this period. At the same
time, the beef and dairy cow inventories increased only slightly to 12.15 million beef
cows and 2.10 million dairy cows. Increased other cattle slaughter rates contributed to
A Policy Model for Mexico’s Livestock and Poultry Sectors 3
the decline in cattle inventory. Prolonged drought and increased feed and veterinary
costs also have driven down Mexican cattle inventories. Mexico’s calving rate has
averaged .65 calf per cow per year since 1985. This is very low compared to the U.S.
calving rate of .90.
Mexico is the largest exporter of feeder cattle to the United States. In fact,
Mexico supplies the United States with 75 to 90 percent of all of its feeder cattle imports
(USDA/ERS 1997). Mexico’s cattle producers in the northern region specialize in
cow/calf production to fulfill the demand for feeder cattle in the U.S. market
(USDA/FAS 1997a). After being exported to the United States, the feeder cattle are
fattened on corn rations in feedlots until ready for slaughter. Mexico is also the number
one export market for live cattle from the United States because many of these fattened
animals are exported back to Mexico for slaughter, and also because Mexico imports
many breeding animals from the United States (USDA/FAS 1997b). The cattle trade
figures in Table 2 illustrate this flow of animals. In 1996, Mexico exported nearly
460,000 head of cattle to the United States and also imported nearly 186,000 head from
the United States.
Mexican imports of beef from countries other than the United States are limited
due to high tariffs placed on non-NAFTA countries. For example, frozen beef imports
from the European Union are subject to 45.7 percent countervailing duties in addition to a
25 percent tariff (USDA/FAS 1997a). Mexico and Argentina, however, have signed a
sanitary agreement and are currently negotiating to declare certain areas of Argentina as
foot and mouth disease (FMD) free (USDA/FAS 1997a). This agreement will allow
exports from Argentina to Mexico in the near future. Meanwhile, the United States will
continue to supply the majority of beef to Mexico. Because of current trade restrictions,
the United States accounted for more than 95 percent of Mexico’s beef imports and
exports in 1996 (Table 3).
Swine and Pork
Sixty-seven percent of Mexico’s hogs are produced in the central region and 25
percent in the southern region (Bierlen and Hayes 1994). Mexico still employs a
technologically mixed hog production system. Adaptation of U.S. production
4 Barrett and Fabiosa
technologies, however, has allowed Mexico to shift from a traditional backyard
production system toward a more sophisticated production scheme (Bierlen and Hayes
1994). Traditional production for personal consumption is highly concentrated around
Mexico City and in the southern region of Mexico (Bierlen and Hayes 1994). Mexico’s
relatively low annual pigs per sow figures reflect this mixed production system. Many
countries annually produce 20 pigs per sow; however, Mexico’s pig crop has averaged
only 16 since 1985 (Table 4). Mexico’s total swine inventory has fallen from an average
of 11 million head between 1985 and 1990 to 10.8 million head between 1991 and 1997.
Mexico’s sow herd has averaged nearly .9 million since 1985.
Lower-income families consume most of the pork in Mexico. Mexico’s per
capita pork consumption has fallen steadily from 12.56 kg/person on a carcass basis in
1988 to 9.79 kg/person in 1997 (FAPRI 1998). However, aggregate pork consumption
has risen from an average of 909 thousand metric tons between 1985 and 1990 to 928
thousand metric tons between 1991 and 1997. At the same time, Mexico’s pork
production has decreased. This has caused Mexico’s pork imports to increase from an
average of 10 thousand metric tons to 54 thousand metric tons over the same periods.
Two features highlight Mexico’s swine and pork trade: Mexico imports nearly all
of its swine and pork from the United States, and it exports nearly all of its pork to Japan
(Tables 5 and 6). Because of disease problems, Mexico currently does not export any
hogs to the United States. However, the United States has approved the state of Sonora
as a low-risk area for hog cholera and will begin allowing imports from this region
(USDA/FAS 1997a). Mexico’s recognition of regions in other South American countries
as being free of FMD could greatly impact the United States’s share of Mexico’s pork
and swine trade. Argentina and Brazil could increase the competition for this market.
Broilers
One of the likely reasons for the steady decline in Mexico’s per capita
consumption of pork is that consumption of poultry has increased dramatically over time.
Broiler consumption has increased from 11 kg/person in 1988 to 17.6 kg/person in 1997
(FAPRI 1998). Table 7 highlights this dramatic increase in broiler consumption on an
aggregate basis. Mexico’s aggregate consumption averaged 757 thousand metric tons
A Policy Model for Mexico’s Livestock and Poultry Sectors 5
between 1985 and 1990. It increased to an average of 1.48 million metric tons between
1991 and 1997. Furthermore, the 1998 FAPRI baseline projects that per capita broiler
consumption in Mexico will exceed beef and pork consumption by 2002.
Nearly 67 percent of Mexico’s poultry production is located in the central region
of the country (Bierlen and Hayes 1994). Technological advancements, vertical
integration, improved genetics, and better management practices have bolstered Mexico’s
poultry production capabilities. In fact, Mexican broiler production has increased from
an average of 729 thousand metric tons between 1985 and 1990 to 1.3 million tons
between 1991 and 1997 (Table 7). Mexico’s demand has outpaced production, however,
causing Mexico’s broiler imports to increase from 29 thousand metric tons to 91
thousand metric tons over the same period (Table 7).
6 Barrett and Fabiosa
Model Structure
Several features have been introduced in the FAPRI international livestock and
poultry modeling system. The new model clearly differentiates between stock and flow
variables. Where data allow, only flow variables are behaviorally specified and
estimated. These flow variables are then aggregated in an accounting identity manner to
derive the level of the stock variables. A graphic illustration of this modeling system is
presented in Figures 1 through 4. The ovals denote flow variables, and the rectangles
represent stock variables.
Another important feature of this model is that it estimates flow variables as rates
rather than as absolute levels. This is advantageous because rates are virtually universal
and easily allow for comparisons between countries and for the detection of errors. Also,
based on historical data, rates are generally more stable than are their corresponding
levels.
Moreover, biological or technological constraints on the rates of flow variables
are accommodated with the use of logistic functional forms. This provides an upper
bound for the logistic form. However, specifying purely theoretical or biological
maximums as the upper bound for a logistic form generally provides poor results.
Therefore, this model uses the historical maximum plus a nonnegative constant as the
upper bound to allow for technological improvements.
A Policy Model for Mexico’s Livestock and Poultry Sectors 7
Data and Estimation
All equations in this model were estimated in SAS using Production Supply and
Distribution (PS&D) data for production and inventory figures and Organization for
Economic Cooperation and Development (OECD) data for producer prices. Some
constraints were imposed on the parameters to satisfy theoretical restrictions. To impose
further discipline in the parameter estimation, econometric problems were addressed
where possible. Significance of parameters, goodness-of-fit, and serial correlation were
all considered.
The fit of the models was good as shown by their high R2. In particular, nine
equations explained more than 90 percent of the total variation in the dependent
variables. Six equations explained between 80 and 90 percent of the variation, and five
equations explained between 70 and 80 percent of the total variation in the dependent
variables. Furthermore, most equations have Durbin-Watson statistics that do not give
conclusive support for the presence of serial correlation. Specifically, 16 equations had
Durbin-Watson statistics between 1.3 and 2.7. The estimates for the Mexico model are
provided in Tables 8 through 31.
The specification and functional forms are presented below. The equations are
grouped according to commodity. The equations within each commodity are further
divided into three categories—flow variables, stock variables, and an equilibrium
condition. The definitions of variables are given in Table 32.
8 Barrett and Fabiosa
Beef Model Equations
1. FLOW VARIABLES
1.1 BEEF DEMAND
EQ.MXBF1 = EXP (BD0 + BD1*LOG(BVPRFMX/CPCPIMX)
+ BD2*LOG(POPRFMX/CPCPIMX)
+ BD3*LOG(PYPRFMX/CPCPIMX)
+ BD4*LOG(NAPDDMX/DEPOPMX)
+ BD5*LOG(TRD)
+ LOG(DEPOPMX)
- LOG(1000))
- BVUDCMX;
1.2 CALF CROP
EQ.MXBF2 = (LAG(CESBWMXE + CESMCMXE)) *(.85 / (1 + EXP( -1 * (CC0
+ CC1*TRD
+ CC2*D8485))) )
- CESCVMX;
1.3 COW SLAUGHTER
EQ.MXBF3 = EXP(WS0 + WT1*LOG(BVPRFMX/CPCPIMX)
+ WT2*LOG(MIPRFMX/CPCPIMX)
+ WS3*LOG(TRD)
+ WS4*D83
+ WS5*D89
+ LOG(LAG(CESBWMXE)
+ LAG(CESMCMXE)) )
- CEKCWMX;
1.4 OTHER SLAUGHTER
EQ.MXBF4 = EXP ( OS0 + OS1*LOG(BVPRFMX/CPCPIMX)
+ OS2*LOG(TRD)
+ OS3*D8687
+ OS4*D8990
+ OS4*D85
+ LOG(LAG(CESOTMXE)) )
- CEKOTMX ;
A Policy Model for Mexico’s Livestock and Poultry Sectors 9
1.5 CALF SLAUGHTER
EQ.MXBF5 = EXP ( CS0 + CS1*LOG(BVPRFMX/CPCPIMX)
+ CS2*LOG(LAG(CEKCVMX/CESCVMX))
+ CS3*LOG(TRD)
+ CS4*D8890
+ LOG(CESCVMX) )
- CEKCVMX;
1.6 BEEF COW ENDING INVENTORY
EQ.MXBF6 = EXP ( BC0 + BC1*LOG(BVPRFMX/CPCPIMX)
+ BC2*LOG(LAG(BVPRFMX/CPCPIMX))
+ BC3*LOG(TRD)
+ BC4*D8388 )
- CESBWMXE;
1.7 BEEF DEATH
EQ.MXBF7 = LAG(CESOTMXE+CESBWMXE+CESMCMXE)*( .06 / (1 + EXP( -1*( DT0
+ DT1*TRD
+ DT2*D8890))) )
- CEUDDMX;
1.8 SLAUGHTER WEIGHT
EQ.MXBF8 = 0.0750 + (CWW0 - 0.0750)*(CEKCWMX/CEKTNMX)
+ (COW0 - 0.0750)*(CEKOTMX/CEKTNMX)
+ COW1*(CEKOTMX/CEKTNMX)*TRD
+ COW2*(CEKOTMX/CEKTNMX)*(BVPRFMX/CPCPIMX)
+ D1*D82 + D3*D85
- BVSWTMX
1.9 CATTLE IMPORTS
EQ.MXBF9 = EXP (CM0 + CM1*LOG(BVPRFMX/BVPRFU9)
+ CM2*LOG(TRD)
+ CM3*D88
+ CM4*D90 )
- CESMTMX;
1.10 CATTLE EXPORTS
EQ.MXBF10 = EXP (CX0 + CX1*LOG(BVPRFMX/BVPRFU9)
+ CX2*LOG(TRD) )
- CEUXTMX;
10 Barrett and Fabiosa
1.11 BEEF AND VEAL IMPORTS
EQ.MXBF11 = EXP (BM0 + BM1*LOG(BVPRFMX/BVPRFU9)
+ BM2*LOG(TRD) )
- BVSMTMX;
1.12 BEEF AND VEAL EXPORTS
EQ.MXBF12 = EXP (BX0 + BX1*LOG(BVPRFMX/BVPRFU9)
+ BX2*LOG(TRD) )
- BVUXTMX;
2. STOCK VARIABLES
2.1 OTHER CATTLE INVENTORY
EQ.MXBF13 = LAG(CESOTMXE)
+ (CESCVMX-CEKCVMX)
+ CESMTMX
- CEKOTMX
- ((CESBWMXE + CESMCMXE) - LAG(CESBWMXE + CESMCMXE)
+ CEKCWMX
+ CEUDDMX*LAG((CESBWMXE + CESMCMXE)/
(CESBWMXE+CESMCMXE+CESOTMXE)))
- CEUDDMX*LAG((CESOTMXE)/
(CESBWMXE+CESMCMXE+CESOTMXE))
- CEUXTMX
- CESOTMXE;
3. EQUILIBRIUM CONDITION
3.1 EQUILIBRIUM EQUATION
EQ.MXBF14 = LAG(BVCOTMX)
+ (CEKCVMX+CEKCWMX+CEKOTMX)*BVSWTMX
+ BVSMTMX
- BVUDCMX
- BVUXTMX
- BVCOTMX;
A Policy Model for Mexico’s Livestock and Poultry Sectors 11
Pork Model Equations
1. FLOW VARIABLES
1.1 PORK DEMAND
EQ.MXP01 = EXP ( PD0 + PD1*LOG(POPRFMX/CPCPIMX)
+ PD2*LOG(BVPRFMX/CPCPIMX)
+ PD3*LOG(PYPRFMX/CPCPIMX)
+ PD4*LOG(NAPDDMX/DEPOPMX)
+ PD5*D7989
+ PD6*D82
+ PD7*D83
+ LOG(DEPOPMX)
- LOG(1000) )
- POUDCMX;
1.2 SLAUGHTER WEIGHT
EQ.MXP02 = ( 0.075 / ( 1 + EXP ( -1 * ( WT0
+ WT1*(POPRFMX/FDPRFMX)
+ WT2*D83
+ WT3*TRD))) )
- POKWTMX;
1.3 PORK EXPORTS
EQ.MXPO3 = EXP ( PX0 + PX1*LOG(POPRFMX/POPRFU9)
+ PX2*D92
+ PX3*LOG(LAG(POUXTMX)) )
- POUXTMX;
1.4 PORK IMPORTS
EQ.MXPO4 = EXP ( PM0 + PM1*LOG(POPRFMX/POPRFU9)
+ PM2*LOG(TRD) )
- POSMTMX;
1.5 SWINE IMPORTS
EQ.MXPO5 = EXP ( SM0 + SM1*LOG(POPRFMX/POPRFU9)
+ SM2*D91
+ SM3*LOG(TRD) )
- HQSMTMX;
12 Barrett and Fabiosa
1.6 TOTAL SWINE SLAUGHTER
EQ.MXPO6 = EXP ( TS0 + TS1*LOG(POPRFMX/FDPRFMX)
+ TS2*D7582
+ TS3*D8387
+ TS4*D8891
+ TS5*LOG(TRD)
+ LOG(HQCITMX) )
- HQKTNMX;
1.7 SOW ENDING INVENTORY
EQ.MXPO7 = EXP ( SE0 + SE1*LOG(POPRFMX/FDPRFMX)
+ SE2*LOG(LAG(SWCOTMX))
+ SE3*LOG(TRD)
+ SE4*D89 )
- SWCOTMX;
1.8 PIG CROP
EQ.MXP8 = LAG(SWCOTMX)*( 20 / ( 1 + EXP ( -1 * ( SC0
+ SC1*TRD
+ SC2*D8385
+ SC3*D92 ))) )
- HQSPGMX;
1.9 SWINE DEATH
EQ.MXPO9 = EXP ( SD0 + SD1*LOG(TRD)
+ LOG(HQSPGMX+HQCITMX) )
- HQUDDMX;
2. STOCK VARIABLES
2.1 TOTAL SWINE INVENTORY
EQ.MXPO10 = LAG(HQCOTMX)
+ HQSPGMX
+ HQSMTMX
- HQKTNMX
- HQUDDMX
- HQCOTMX;
A Policy Model for Mexico’s Livestock and Poultry Sectors 13
3. EQUILIBRIUM CONDITION
3.1 EQUILIBRIUM EQUATION
EQ.MXP11 = LAG(POCOTMX)
+ POKWTMX*HQKTNMX
+ POSMTMX
- POUDCMX
- POUXTMX
- POCOTMX;
Broiler Model Equations
1. FLOW VARIABLES
1.1 BROILER DEMAND
EQ.MXBR1 = EXP ( RD0 + RD1*LOG(PYPRFMX/CPCPIMX)
+ RD2*LOG(BVPRFMX/CPCPIMX)
+ RD3*LOG(POPRFMX/CPCPIMX)
+ RD4*LOG(NAPDDMX/DEPOPMX)
+ RD5*LOG(TRD)
+ LOG(DEPOPMX)
- LOG(1000) )
- BRUDCMX;
1.2 BROILER PRODUCTION
EQ.MXBR2 = EXP ( RP0 + RP1*LOG(PYPRFMX/FDPRFMX)
+ RP2*LOG(TRD)
- BRSPRMX;
1.3 BROILER IMPORTS
EQ.MXBR3 = EXP ( RM0 + RM1*LOG(PYPRFMX/(PYPRFU9*NIME_MX))
+ RM2*LOG(TRD)
+ RM3*D8891
+ RM4*D92GR )
- BRSMTMX;
14 Barrett and Fabiosa
2. EQUILIBRIUM CONDITION
2.1 EQUILIBRIUM EQUATION
EQ.MXBR4 = LAG(BRCOTMX)
+ BRSPRMX
+ BRSMTMX
- BRUDCMX
- BRCOTMX.
Validation
After all equations were estimated, the model was solved simultaneously in a
simulation program using SAS software. This section reports several of the validation
statistics generated from this in-sample simulation. Only four are highlighted in this
discussion. Evaluation of the model was based on comparisons of the descriptive
statistics, the statistics of fit, the Mean Squared Error (MSE) and its components, and the
Theil inequality coefficients.
A well-designed model useful for projections should produce projections of
endogenous variables with mean values that approach the mean values of the actual
series. This also implies that the mean percentage error is close to zero. Moreover, in the
decomposition of the MSE, an adequate model should produce projections that are
closely correlated to the actual series (i.e., correlation coefficient approaches unity; that
are without consistent bias (i.e., bias approaches zero); whose variability closely mirrors
the variability of the actual series (i.e., variance approaches zero); and for which all
remaining deviations of the projection from the actual are random (i.e., covariance is a
large number). Also, when the predicted series is close to the actual series, both the U
and U1 Theil coefficients of inequality approach zero. The validation statistics for the
three sectors are shown in Tables 33 through 44.
In the beef model, the mean values of the predicted series are close to the mean of
the actual series. This is also supported by the fact that all mean percentage errors for the
predicted series are less than two percentage points from the mean except for beef
imports, which are approximately five percentage points below the mean. All variables
show high correlation with the actual series. The bias for all variables is small.
However, the decomposition suggests that the variability of the actual series is not fully
A Policy Model for Mexico’s Livestock and Poultry Sectors 15
captured by the variability of the predicted series because the variance is greater than .30
for five of the endogenous variables.
In the pork model, the predicted series closely follows the actual series. The
mean percentage errors for all variables except pork imports and swine death are within
four percentage points. Pork imports and swine death are still within an acceptable range.
Furthermore, all but two endogenous variables show very strong correlation to the actual
series. As is evident by the variance coefficients of three variables greater than .50, not
all of the variability of the actual series is captured by the variability of the predicted
series.
The validation statistics confirm that the broiler model predictions most closely
followed the actual series. The mean predicted values closely follow the mean of the
actual values and all mean percentage errors are less than six percentage points. All
variables have low bias and variance. Also, they exhibit strong correlation and high
covariance.
Trade equations for cattle and swine imports and pork exports were exogenized in
the simulation to obtain more suitable validation statistics. It is difficult to accurately
model Mexico’s imports and exports of live animals and meat. One reason is that many
of their levels have historically been very low and sporadic. For example, Mexico’s pork
imports were zero from 1982 to 1986, and then peaked at 80 thousand metric tons in
1994, and then dropped to 30 thousand metric tons in 1996 (USDA/PS&D). Low levels
of trade also inflate percentage errors for small prediction errors. In addition, significant
trade only in recent years shortens the suitable estimation period for parameters.
Projections
Using WEFA Group macroeconomic forecasts, this model was used in
spreadsheet form to generate out-of-sample projections as part of the 1998 FAPRI
baseline. The baseline is used to evaluate the impacts of policy changes and exogenous
shocks on world trade volumes and prices. The results of the 1998 baseline are presented
in Tables 48 and 49. Mexico’s imports of beef, pork, and broiler meat are projected to
increase by 315 thousand metric tons, 29 thousand metric tons, and 170 thousand metric
tons from 1997 levels by 2007 (Table 49). Mexico’s production and consumption of all
16 Barrett and Fabiosa
three commodities are expected to grow over the next decade. The production
projections do not grow as rapidly as the consumption projections, however, causing
Mexico to rely on imports to fulfill domestic demand (Table 49). Mexico’s per capita
broiler consumption also is expected to exceed beef per capita consumption by 2002.
Model Improvements
This new model introduced many structural improvements and refinements from
the previous FAPRI Mexico model, which consisted of four main equations for each
commodity: demand, production, inventory, and residual trade equations. Also, the
demand equations for pork, beef, and poultry used U.S. prices and did not account for
cross-price relationships. Using U.S. prices did not allow for domestic price clearing
conditions. Furthermore, the previous model contained no behavioral trade equations,
and therefore, net meat trade was found exogenously as a residual of the difference
between domestic supply and consumption.
Improvements in the new FAPRI model structure include functional form
equations and more equations for each commodity, enabling the model to estimate flow
variables to capture more fully the biological processes in animal inventories, investment
decisions of livestock producers, and trade dynamics within Mexico’s livestock sector.
Specifically, the new FAPRI Mexico livestock and poultry model contains separate
slaughter equations for cows, other cattle, calves, sows, and other hogs. These equations,
along with breeding herd addition and offspring equations, allow the model to capture
fully the flow of specific categories of animals through the production cycle. Beneficial
changes in the existing equations were also made. The demand relationships were
estimated using own-price and cross-price relationships to account for substitution
effects. The demand, production, and trade equations also use domestic prices. By using
domestic prices, this model solves for the domestic price and satisfies domestic price
clearing conditions.
Another enhancement in the new model is that it contains both live animal and
meat trade equations. This change allows for behavioral decisions and refines the net
trade position by dividing net trade into imports and exports.
A Policy Model for Mexico’s Livestock and Poultry Sectors 17
Summary
Many economic and demographic trends along with increased free trade
agreements are projected to increase Mexico’s prominence in the world markets for meat
products over the next 10 years. This model was designed to incorporate these factors to
provide useful projections. Its structure, containing differentiated flow and stock
variables and functional form equations, enables it to capture the dynamics of Mexico’s
livestock and meat sectors. The diagnostic statistics do not show any serious econometric
problems, and the validation statistics from the simulation show that all equations tracked
the actual series very closely.
18 Barrett and Fabiosa
Table 1. Cattle and Beef Historical Data
Average 1985–1990
Cattle
Inventory (1000 head)
Total Cattle
Beef Cows
Dairy Cows
Other Cattle
Production Rates
Calf Crop
Cow Slaughter
Calf Slaughter
Other Slaughter
Death
Share of Slaughter
Calf
Cow
Other
Beef
Supply
Beginning Stocks
Production
Imports
Demand
Ending Stocks
Domestic Consumption
Exports
Average 1991–1997
(Thousand Head)
33,625
12,050
2,015
19,560
29,523
12,151
2,099
15,273
(Percentage)
0.65
0.13
0.2
0.22
0.03
0.64
0.12
0.19
0.31
0.03
0.24
0.22
0.54
0.21
0.21
0.58
(Thousand Metric Tons)
0
0
1,571
1,744
21
102
0
1,591
2
0
1,845
2
A Policy Model for Mexico’s Livestock and Poultry Sectors 19
Table 2. Sources and Destinations of Mexico’s Cattle Trade in 1996
Trading Partner
Exports
United States
Others
Total
Imports
Australia
Canada
United States
Others
Total
Quantity (Head)
458,174
Percentage of Total
99.95
223
458,397
0.05
3,964
8,532
185,934
118
198,548
2.00
4.30
93.64
0.06
Table 3. Sources and Destinations of Mexico’s Beef Trade in 1996
Trading Partner
Exports
United States
Others
Total
Imports
Australia
Canada
United States
Others
Total
Quantity (kg)
Percentage of Total
1,487,180
54,067
1,541,247
96.49
3.51
554,951
467,671
71,998,565
289,184
73,310,371
0.76
0.64
98.21
0.39
20 Barrett and Fabiosa
Table 4. Swine and Pork Historical Data
Average 1985–1990
Average 1991–1997
Swine
Inventory
Total Inventory
Sows
Other
11,040
897
10,143
(Thousand Head)
10,816
895
9,921
Production Rates
Pig Crop
Sow Slaughter
Other Slaughter
Death
16
NA
1.26
0.24
16
NA
1.25
0.18
NA
NA
NA
NA
Shares of Slaughter
Sow
Other
Pork
Supply
Beginning Stocks
Production
Imports
Demand
Ending Stocks
Domestic Consumption
Exports
Average 1993–1997
(Percentage)
(Thousand Metric Tons)
0
899
10
0
881
54
0
909
0
0
928
7
0.03
0.002
0.998
A Policy Model for Mexico’s Livestock and Poultry Sectors 21
Table 5. Sources and Destinations of Mexico’s Swine Trade in 1996
Trading Partner
Exports
Venezuela
Japan
Guatemala
Total
Imports
Canada
United States
Others
Total
Quantity (Head)
Percentage of Total
626
14
0
640
97.81
2.19
0.00
1,393
36,158
421
37,972
3.67
95.22
1.11
Table 6. Sources and Destinations of Mexico’s Pork Trade in 1996
Trading Partner
Exports
Japan
Others
Total
Imports
Canada
United States
Others
Total
Quantity (kg)
Percentage of Total
12,535,525
540,027
13,075,552
95.87
4.13
1,123,259
29,266,740
20,597
30,410,596
3.69
96.24
0.07
22 Barrett and Fabiosa
Table 7. Broiler Historical Data
Supply
Beginning Stocks
Production
Import
Demand
Ending Stocks
Domestic Consumption
Exports
Average 1985–1990
Average 1991–1997
(Thousand Metric Tons)
0
0
729
1391
29
91
0
757
1
0
1480
1
Estimation Tables
Beef Model
Table 8. Beef Demand in Mexico (BVUDCMX)
Parameter
Independent
BD0
BD1
BD2
BD3
Intercept
Real Beef Producer Price
Real Pork Producer Price
Real Poultry Producer
Price
Real Per Capita GDP
Trend
BD4
BD5
Diagnostic
R2
Adj R2
DW
Estimate
Std Dev
"T" Ratio
Prob>°T°
9.7933
-0.3500
0.1000
0.1500
8.2564
1.1900
0.2540
0.6265
0.3271
0.7413
0.1110
0.8500
2.9500
0.4113
0.0100
Estimate
Std Dev
"T" Ratio
Prob>°T°
1.0063
0.0064
-0.1314
0.0596
0.0032
0.0685
16.8900
1.9800
-1.9200
0.0001
0.0628
0.0702
0.7204
0.6831
1.1070
Table 9. Calf Crop in Mexico (CESPRMX)
Parameter
Independent
CC0
CC1
CC2
Intercept
Trend
Dummy 1984-1985
Diagnostic
R2
Adj R2
DW
0.9486
0.9432
0.8790
A Policy Model for Mexico’s Livestock and Poultry Sectors 23
Table 10. Cow Slaughter In Mexico (CEKCWMX)
Parameter
Independent
WS0
WS1
WS2
WS3
WS4
WS5
Intercept
Real Beef Price
Real Milk Price
Trend
Dummy 1983
Dummy 1989
Diagnostic
R2
Adj R2
DW
Estimate
Std Dev
"T" Ratio
Prob>°T°
-0.8922
-0.2167
-0.1000
0.0208
0.3526
0.5861
1.6671
0.2108
-0.5400
-1.0300
0.6016
0.3226
0.1244
0.0707
0.0518
0.1700
4.9900
11.3100
0.8697
0.0002
0.0001
Estimate
Std Dev
"T" Ratio
Prob>°T°
-5.7646
0.1500
1.1345
-0.3754
0.1372
0.0795
0.2579
-22.3500
0.0001
0.0824
0.0514
0.0281
0.0528
13.7700
-7.3100
4.8800
1.5100
0.0001
0.0001
0.0012
0.1706
0.9093
0.8814
1.6030
Table 11. Other Cattle Slaughter in Mexico (CEKOTMX)
Parameter
Independent
OS0
OS1
OS2
OS3
OS4
OS5
Intercept
Real Beef Price
Trend
Dummy 1986-1987
Dummy 1989-1990
Dummy 1985
Diagnostic
R2
Adj R2
DW
0.9734
0.9601
2.4380
24 Barrett and Fabiosa
Table 12. Calf Slaughter in Mexico (CEKCVMX)
Parameter
Independent
CS0
CS1
CS2
CS3
CS4
CS5
Intercept
Real Beef Price
Lag Calf Slaughter
Trend
Dummy 1988-1990
Diagnostic
R2
Adj R2
DW
Estimate
Std Dev
"T" Ratio
Prob>°T°
-1.9980
-0.0382
0.1990
0.2740
0.1604
1.4445
0.1536
0.0798
0.1709
0.0190
-1.3800
-0.2500
2.4900
1.6000
8.4400
0.2159
0.8119
0.0469
0.1599
0.0002
Estimate
Std Dev
"T" Ratio
Prob>°T°
6.1991
0.1351
0.2140
0.3179
0.0293
0.7062
0.0864
0.0827
0.0447
0.0158
8.7800
1.5600
2.5900
7.1100
1.8600
0.0001
0.1418
0.0225
0.0001
0.0851
0.9191
0.8652
1.4900
Table 13. Beef Cow Inventory in Mexico (CESBWMX)
Parameter
Independent
BC0
BC1
BC2
BC3
BC4
Intercept
Real Beef Price
Lag Real Beef Price
Trend
Dummy 1983-1988
Diagnostic
R2
Adj R2
DW
0.8517
0.8060
1.3960
A Policy Model for Mexico’s Livestock and Poultry Sectors 25
Table 14. Cattle Death Rate in Mexico (CEUDDMX)
Parameter
Independent
DT0
DT1
DT2
Intercept
Trend
Dummy 1988-1990
Diagnostic
R2
Adj R2
DW
Estimate
Std Dev
"T" Ratio
Prob>°T°
-0.6332
0.0127
0.6364
0.4784
0.0210
0.1398
-1.3200
0.6100
4.5500
0.2222
0.5606
0.0019
Estimate
Std Dev
"T" Ratio
Prob>°T°
0.1479
0.1219
0.0039
0.0001
0.0128
-0.0198
0.0568
0.0718
0.0014
1.8100
0.0084
0.0092
2.6000
1.7000
2.8200
0.0976
1.5300
-2.1600
0.0246
0.1177
0.0166
0.8331
0.7913
3.0630
Table 15. Beef Slaughter Weight In Mexico (BVSWTMX)
Parameter
CWWO
COWO
COW1
COW2
D1
D3
Diagnostic
R2
Adj R2
DW
Independent
0.0001
0.9307
0.9099
1.4120
0.1551
0.0537
26 Barrett and Fabiosa
Table 16. Cattle Imports In Mexico (CESMTMX)
Parameter
Independent
CM0
CM1
CM2
CM3
CM4
Intercept
Mexico to World Beef Price Ratio
Trend
Dummy 1988
Dummy 1990
Diagnostic
R2
Adj R2
DW
Estimate
Std Dev
"T" Ratio
Prob>°T°
3.8105
2.0000
-0.4075
0.7479
-0.4375
2.8681
1.3300
0.2135
0.9256
0.3374
0.8969
-0.4400
2.2200
-0.4900
0.6691
0.0510
0.6362
Estimate
Std Dev
"T" Ratio
Prob>°T°
2.1122
0.9000
1.8980
0.7770
2.7200
0.0166
0.2541
7.4700
0.0001
0.6168
0.5018
1.3990
Table 17. Cattle Exports in Mexico (CEUXTMX)
Parameter
Independent
CX0
CX1
CX2
Intercept
Mexico to World Beef Price Ratio
Trend
Diagnostic
R2
Adj R2
DW
0.7760
0.7600
1.7740
A Policy Model for Mexico’s Livestock and Poultry Sectors 27
Table 18. Beef and Veal Imports in Mexico (BVSMTMX)
Parameter
Independent
BM0
BM1
BM2
Intercept
Mexico to World Beef Price
Trend
Estimate
Std Dev
"T" Ratio
Prob>°T°
-4.7421
1.3000
2.3980
2.2750
-2.0800
0.0546
0.7196
3.3300
0.0045
Diagnostic
R2
Adj R2
DW
0.7485
0.7317
0.5830
Table 19. Beef and Veal Exports in Mexico (BVXMTMX)
Parameter
Independent
Estimate
Std Dev
"T" Ratio
Prob>°T°
BX0
BX1
BX2
Intercept
Mexico to World Price Ratio
Trend
48.1605
-1.6000
-19.3290
15.1182
3.1900
0.0054
6.8732
-2.8100
0.0120
Diagnostic
R2
Adj R2
DW
0.7909
0.7786
0.8530
28 Barrett and Fabiosa
Pork-Swine Model
Table 20. Pork Demand in Mexico (POUDCMX)
Parameter
Independent
PD0
PD1
PD2
PD3
Intercept
Real Pork Producer Price
Real Beef Producer Price
Real Poultry Producer
Price
Real Per Capita GDP
Dummy 1979-1989
Dummy 1982
Dummy 1983
PD4
PD5
PD6
PD7
Diagnostic
R2
Adj R2
DW
Estimate
Std Dev
"T" Ratio
Prob>°T°
6.3182
-0.2500
0.1300
0.0800
0.0215
293.5000
0.0001
0.0313
0.0560
0.0508
5.0700
2.9200
4.4300
0.0004
0.0140
0.0010
0.3300
0.1587
0.1634
0.2251
0.6469
0.5506
1.8850
Table 21. Swine Slaughter Weight in Mexico (POKWTMX)
Parameter
Independent
WT0
WT1
WT2
WT3
Intercept
Pork to Feed Price Ratio
Dummy 1983
Trend
Diagnostic
R2
Adj R2
DW
Estimate
Std Dev
"T" Ratio
Prob>°T°
2.6044
0.7409
-0.9292
-0.0104
0.4223
0.3372
0.1490
0.0127
6.17
2.2
-6.24
-0.82
0.0001
0.0503
0.0001
0.4286
0.8769
0.8434
1.5110
A Policy Model for Mexico’s Livestock and Poultry Sectors 29
Table 22. Pork Exports in Mexico (POUXTMX)
Parameter
Independent
PX0
PX1
PX2
PX3
Intercept
Mexico to World Pork Price Ratio
Dummy1992
Lag Pork Exports
Diagnostic
R2
Adj R2
DW
Estimate
Std Dev
"T" Ratio
Prob>°T°
2.6846
1.3500
0.7783
0.5000
0.0935
28.7000
0.0001
0.1937
4.0200
0.0277
Estimate
Std Dev
"T" Ratio
Prob>°T°
-4.7922
1.5000
2.0026
3.6187
-1.3200
0.2270
1.1393
1.7600
0.1222
0.7344
0.6459
1.4950
Table 23. Pork Imports in Mexico (POSMTMX)
Parameter
Independent
PM0
PM1
PM2
Intercept
Mexico to World Pork Price Ratio
Trend
Diagnostic
R2
Adj R2
DW
0.6132
0.5579
1.8370
30 Barrett and Fabiosa
Table 24. Swine Imports in Mexico (HQSMTMX)
Parameter
Independent
SM0
SM1
SM2
SM3
Intercept
Mexico to World Pork Price Ratio
Dummy 1991
Trend
Diagnostic
R2
Adj R2
DW
Estimate
Std Dev
"T" Ratio
Prob>°T°
0.6534
1.4500
1.4100
0.4713
3.3904
0.1900
0.8548
0.1750
1.0944
8.0600
0.4300
0.0005
0.6846
0.8965
0.8344
2.0670
Table 25. Swine Slaughter in Mexico (HQKTNMX)
Parameter
Independent
TS0
TS1
TS2
TS3
TS4
TS5
Intercept
Pork to Feed Price Ratio
Dummy 1975-1982
Dummy 1983-1987
Dummy 1988-1991
Trend
Diagnostic
R2
Adj R2
DW
Estimate
Std Dev
"T" Ratio
Prob>°T°
-1.2997
0.2000
-0.1543
0.1030
0.1020
0.1690
0.3418
-3.8000
0.0016
0.1073
0.0647
0.0535
0.1063
-1.4400
1.5900
1.9100
1.5900
0.1698
0.1309
0.0748
0.1313
0.8128
0.7660
1.7440
A Policy Model for Mexico’s Livestock and Poultry Sectors 31
Table 26. Sow Ending Inventory in Mexico (SWCOTMX)
Parameter
Independent
SE0
SE1
SE2
SE3
SE4
Intercept
Pork to Feed Price Ratio
Lag Sow Ending Inventory
Trend
Dummy 1989
Diagnostic
R2
Adj R2
DW
Estimate
Std Dev
"T" Ratio
Prob>°T°
5.7280
0.1254
0.2143
-0.1278
-0.1176
1.4545
0.0497
0.1987
0.0476
0.0392
3.9400
2.5200
1.0800
-2.6800
-3.0000
0.0028
0.0303
0.3061
0.0229
0.0134
0.8021
0.7229
1.5410
32 Barrett and Fabiosa
Table 27. Pig Crop in Mexico (HGSPGMX)
Parameter
Independent
SC0
SC1
SC2
SC3
Intercept
Trend
Dummy 1983-1985
Dummy 1992
Diagnostic
R2
Adj R2
DW
Estimate
Std Dev
"T" Ratio
Prob>°T°
1.1423
0.0122
0.3341
-0.2087
0.0277
0.0016
0.0276
0.0367
41.2100
7.8200
12.1200
-5.6900
0.0001
0.0001
0.0001
0.0001
Estimate
Std Dev
"T" Ratio
Prob>°T°
-1.5795
-0.2719
0.2709
0.0960
-5.8300
-2.8300
0.0001
0.0126
0.9895
0.9876
1.1350
Table 28. Swine Death in Mexico (HQUDDMX)
Parameter
Independent
SD0
SD1
Intercept
Trend
Diagnostic
R2
Adj R2
DW
0.7607
0.7447
0.6600
A Policy Model for Mexico’s Livestock and Poultry Sectors 33
Broiler Model
Table 29. Broiler Demand in Mexico (BRUDCMX)
Parameter
Independent
RD0
RD1
RD2
RD3
RD4
RD5
Intercept
Real Broiler Producer Price
Real Beef Producer Price
Real Pork Producer Price
Real Per Capita GDP
Trend
Diagnostic
R2
Adj R2
DW
Estimate
Std Dev
"T" Ratio
Prob>°T°
9.5802
-0.4000
0.2000
0.1500
0.9500
1.3001
0.3157
30.3500
0.0001
0.1013
12.8400
0.0001
0.9677
0.9657
0.8690
Table 30. Broiler Production in Mexico (BRSPRMX)
Parameter
Independent
RP0
RP1
RP2
Intercept
Broiler to Feed Price Ratio
Trend
Diagnostic
R2
Adj R2
DW
Estimate
Std Dev
"T" Ratio
Prob>°T°
0.7177
0.3000
2.0305
0.4596
1.5600
0.1379
0.1476
13.7500
0.0001
0.9391
0.9353
1.4590
34 Barrett and Fabiosa
Table 31. Broiler Imports In Mexico (BRSMTMX)
Parameter
Independent
RM0
RM1
RM2
RM3
RM4
Intercept
Mexico to World Broiler Price Ratio
Trend
D8891
D92GR
Diagnostic
R2
Adj R2
DW
Estimate
Std Dev
"T" Ratio
Prob>°T°
-7.6292
0.9500
3.2975
0.2078
0.5298
2.4238
-3.1500
0.0104
0.8629
0.4128
0.5046
3.8200
0.5000
1.0500
0.0034
0.6256
0.3185
0.9359
0.9103
2.0830
A Policy Model for Mexico’s Livestock and Poultry Sectors 35
Table 32. Definitions of Variables
Code
HQCITMX
HQCOTMX
HQKOTMX
HQKTNMX
HQSMTMX
HQSPGMX
SWCOTMX
HQSSWMX
HQUDDMX
POSMTMX
POSPRMX
POUDCMX
POUXTMX
POKWTMX
BRSMTMX
BRSPRMX
BRUDCMX
CECOTMX
CEKCVMX
CEKCWMX
CEKOTMX
CEKTNMX
CESBWMXE
CESCVMX
CESMCMXE
CESMTMX
CEUDDMX
CEUXTMX
BVSMTMX
BVSPRMX
BVUDCMX
BVUXTMX
BVSWTMX
NAPDDMX
DEPOPMX
CPCPIMX
NIME_MX
BVPRFMX
MIPRFMX
Description
Units
Swine; Stocks, Beginning; Mexico
Swine; Stocks, Ending; Mexico
Swine; Slaughter, Other; Mexico
Swine; Slaughtered; Mexico
Swine; Imports; Mexico
Swine; Pigs, Born; Mexico
Swine; Sows; Mexico (Ending)
Swine; Sows; Mexico (Beginning)
Swine; Deaths; Mexico
Pork; Imports; Mexico
Pork; Production, MT; Mexico
Pork; Consumption; Mexico
Pork; Exports; Mexico
Pork; Slaughter Weight; Mexico
Broilers, Live and Meat; Imports; Mexico
Broilers, Live and Meat; Production, Mt; Mexico
Broilers, Live and Meat; Consumption; Mexico
Cattle; Stocks, Ending; Mexico
Cattle; Calves, Slaughtered; Mexico
Cattle; Cows, Slaughtered; Mexico
Cattle; Slaughter, Other; Mexico
Cattle; Slaughtered; Mexico
Thousand Head
Thousand Head
Thousand Head
Thousand Head
Thousand Head
Thousand Head
Thousand Head
Thousand Head
Thousand Head
Thousand Metric Ton
Thousand Metric Ton
Thousand Metric Ton
Thousand Metric Ton
Thousand Metric Ton
Thousand Metric Ton
Thousand Metric Ton
Thousand Metric Ton
Thousand Head
Thousand Head
Thousand Head
Thousand Head
Thousand Head
Thousand Head
Thousand Head
Thousand Head
Thousand Head
Thousand Head
Thousand Head
Thousand Metric Ton
Thousand Metric Ton
Thousand Metric Ton
Thousand Metric Ton
Thousand Metric Ton
Index
Thousand
Index
Peso/US $
Peso/100 kg
Peso/100 kg
Cattle; Cows, Beef; Mexico, t 2 Years December (End)
Cattle; Calves, Born; Mexico
Cattle; Milking Animals, Head; Mexico, t 2 Years Dec.
Cattle; Imports; Mexico
Cattle; Deaths; Mexico
Cattle; Exports; Mexico
Meat, Beef and Veal; Imports; Mexico
Meat, Beef and Veal; Production, Mt; Mexico
Meat, Beef and Veal; Consumption; Mexico
Meat, Beef and Veal; Exports; Mexico
Cattle; Slaughter Weight; Mexico
Gross Domestic Product Index 1990=1
Population, MidNAyear Estimates
Consumer Price Index 1990=1
Exchange Rate, Spot
Beef and Veal Producer Price
Milk Producer Price
36 Barrett and Fabiosa
POPRFMX
PYPRFMX
FDPRFMX
BVPRFU9
POPRFU9
PYPRFU9
Pork Producer Price
Poultry Producer Price
Feed Cost Index
Nebraska Direct Steers (1100NA1300 lbs.)
IANASoNA MN 230NA250 lbs. Barrows and Gilts
12NACity Wholesale
Peso/100 kg
Peso/100 kg
Peso/100 kg
$/cwt.
$/cwt.
c/lbs.
A Policy Model for Mexico’s Livestock and Poultry Sectors 37
Validation Tables
Beef Model
Table 33. Descriptive Statistics
Variable
Description
BVPRFMX
BVUDCMX
CESBWMXE
CESCVMX
CEKCWMX
CESOTMXE
CEKOTMX
CEKCVMX
CEUDDMX
BVSWTMX
CEUXTMX
BVSMTMX
Beef Producer Price
Beef and Veal Consumption
Beef Cow Inventory (End)
Calf Crop
Cow Slaughter
Other Cattle Inventory (End)
Other Slaughter
Calf Slaughter
Cattle Death
Slaughter Weight
Cattle Exports
Beef and Veal Imports
Actual
Mean
Std
Predicted
Mean
Std
826.5744
1821.0000
12343.0000
9395.0000
1663.0000
15502.0000
4707.0000
1742.0000
800.0000
0.2137
1217.0000
89.6667
139.9091
75.2666
558.4502
366.9478
67.4290
495.3132
395.1034
78.5918
100.6062
0.0047
247.9987
33.8802
816.4308
1824.0000
12289.0000
9396.0000
1670.0000
15503.0000
4747.0000
1749.0000
814.8036
0.2142
1203.0000
77.6969
167.3692
81.9798
243.0405
362.3681
104.1072
662.9902
365.9472
79.7691
130.7297
0.0039
299.9026
22.9747
Table 34. Statistics of Fit
Variable
Description
BVPRFMX
BVUDCMX
CESBWMXE
CESCVMX
CEKCWMX
CESOTMXE
CEKOTMX
CEKCVMX
CEUDDMX
BVSWTMX
CEUXTMX
BVSMTMX
Beef Producer Price
Beef and Veal Consumption
Beef Cow Inventory (End)
Calf Crop
Cow Slaughter
Other Cattle Inventory (End)
Other Slaughter
Calf Slaughter
Cattle Death
Slaughter Weight
Cattle Exports
Beef and Veal Imports
Mean
Error
Mean %
Error
Mean Abs
Error
Mean Abs %
Error
-10.1436
3.2532
-53.9548
0.9814
6.3040
0.9665
40.4094
7.7091
14.8036
0.0005
-14.4231
-11.9697
-1.7604
0.1802
-0.3272
0.0361
0.5769
-0.0162
0.9404
0.4667
1.6309
0.2373
-1.4258
-4.4231
33.2874
26.7069
295.3749
178.4898
114.6715
190.7046
96.8537
33.4271
35.2556
0.0022
97.2191
27.3211
4.6172
1.4777
2.3946
1.8974
6.8703
1.2516
2.0885
1.9322
4.1874
1.0537
7.9424
33.2332
38 Barrett and Fabiosa
Table 35. MSE Decomposition Proportions Inequality Coefficients
Variable
Description
BVPRFMX
BVUDCMX
CESBWMXE
CESCVMX
CEKCWMX
CESOTMXE
CEKOTMX
CEKCVMX
CEUDDMX
BVSWTMX
CEUXTMX
BVSMTMX
Beef Producer Price
Beef and Veal Consumption
Beef Cow Inventory (End)
Calf Crop
Cow Slaughter
Other Cattle Inventory (End)
Other Slaughter
Calf Slaughter
Cattle Death
Slaughter Weight
Cattle Exports
Beef and Veal Imports
MSE
Corr
(R)
Bias
(UM)
Var
(US)
Covar
(UC)
2064
919
125331
41829
16532
61229
13342
1738
2034
0
12053
978
0.9660
0.9150
0.8250
0.8110
-0.3140
0.9310
0.9540
0.8390
0.9520
0.7230
0.9230
0.4330
0.0500
0.0120
0.0230
0.0000
0.0020
0.0000
0.1220
0.0340
0.1080
0.0240
0.0170
0.1460
0.3040
0.0410
0.6610
0.0000
0.0680
0.3830
0.0530
0.0010
0.3720
0.0580
0.1860
0.1010
0.6460
0.9480
0.3150
1.0000
0.9300
0.6170
0.8250
0.9650
0.5210
0.9170
0.7960
0.7520
Table 36. Theil Forecast Error Statistics
Variable
Description
BVPRFMX
BVUDCMX
CESBWMXE
CESCVMX
CEKCWMX
CESOTMXE
CEKOTMX
CEKCVMX
CEUDDMX
BVSWTMX
CEUXTMX
BVSMTMX
Beef Producer Price
Beef and Veal Consumption
Beef Cow Inventory (End)
Calf Crop
Cow Slaughter
Other Cattle Inventory (End)
Other Slaughter
Calf Slaughter
Cattle Death
Slaughter Weight
Cattle Exports
Beef and Veal Imports
U1
U
0.0543
0.0166
0.0287
0.0218
0.0772
0.0160
0.0245
0.0239
0.0560
0.0142
0.0887
0.3297
0.0273
0.0083
0.0144
0.0109
0.0385
0.0080
0.0122
0.0119
0.0277
0.0071
0.0444
0.1784
A Policy Model for Mexico’s Livestock and Poultry Sectors 39
Pork Model
Table 37. Descriptive Statistics
Variable
Description
POPRFMX
POUDCMX
POKWTMX
POSMTMX
HQSPGMX
HQKTNMX
SWCOTMX
HQUDDMX
HQCOTMX
Pork Producer Price
Pork Consumption
Pork Slaughter Weight
Pork Imports
Pig Crop
Swine Slaughter
Sow Ending Inventory
Swine Death
Swine Ending Inventory
Actual
Mean
Std
Predicted
Mean
Std
947.7617
949.0000
0.0716
49.0000
14300.0000
12615.0000
657.5000
2000.0000
11483.0000
343.3296
38.2535
0.0008
22.3010
617.7918
622.8162
439.5737
0.0000
1025.0000
936.6919
931.3232
0.0718
47.3418
14345.0000
12365.0000
873.0341
2231.0000
11548.0000
416.2188
28.7098
0.0002
6.7324
561.2777
368.6468
18.2254
101.1303
624.3557
Mean
Error
Mean %
Error
Mean Abs
Error
Mean Abs %
Error
-11.0698
-17.6768
0.0001
-1.6582
44.8508
-250.3141
215.5341
230.6352
64.5297
-3.2277
-1.7788
0.1850
11.3215
0.3271
-1.8182
.
11.5318
0.9253
58.2693
21.8377
0.0006
15.2361
46.6913
546.0085
231.7976
230.6352
649.5612
6.7106
2.2326
0.8245
33.2691
0.3394
4.2300
.
11.5318
5.6802
Table 38. Statistics of Fit
Variable
Description
POPRFMX
POUDCMX
POKWTMX
POSMTMX
HQSPGMX
HQKTNMX
SWCOTMX
HQUDDMX
HQCOTMX
Pork Producer Price
Pork Consumption
Pork Slaughter Weight
Pork Imports
Pig Crop
Swine Slaughter
Sow Ending Inventory
Swine Death
Swine Ending Inventory
40 Barrett and Fabiosa
Table 39. MSE Decomposition Proportions Inequality Coefficients
Variable
Description
POPRFMX
POUDCMX
POKWTMX
POSMTMX
HQSPGMX
HQKTNMX
SWCOTMX
HQUDDMX
HQCOTMX
Pork Producer Price
Pork Consumption
Pork Slaughter Weight
Pork Imports
Pig Crop
Swine Slaughter
Sow Ending Inventory
Swine Death
Swine Ending Inventory
MSE
Corr
(R)
Bias
(UM)
Var
(US)
Covar
(UC)
4200
1393
0
405
4437
427253
187246
60863
458433
1.0000
0.3860
0.5360
0.0210
1.0000
0.0820
0.3640
.
0.6530
0.0290
0.2240
0.0410
0.0070
0.4530
0.1470
0.2480
.
0.0090
0.9490
0.0490
0.6070
0.4490
0.5400
0.1130
0.7110
.
0.2630
0.0220
0.7270
0.3520
0.5440
0.0070
0.7400
0.0410
.
0.7280
Table 40. Theil Forecast Error Statistics
Variable
Description
POPRFMX
POUDCMX
POKWTMX
POSMTMX
HQSPGMX
HQKTNMX
SWCOTMX
HQUDDMX
HQCOTMX
Pork Producer Price
Pork Consumption
Pork Slaughter Weight
Pork Imports
Pig Crop
Swine Slaughter
Sow Ending Inventory
Swine Death
Swine Ending Inventory
U1
U
0.0652
0.0393
0.0087
0.3821
0.0047
0.0518
0.5696
.
0.0588
0.0325
0.0198
0.0044
0.2005
0.0023
0.0262
0.2650
.
0.0293
A Policy Model for Mexico’s Livestock and Poultry Sectors 41
Broiler Model
Table 41. Descriptive Statistics
Variable
Description
PYPRFMX
BRUDCMX
BRSPRMX
BRSMTMX
Poultry Producer Price
Broiler Consumption
Broiler Production
Broiler Imports
Predicted
Mean
Std
Actual
Mean
Std
544.3217
1154.0000
1095.0000
61.4545
252.1597
363.9067
333.9261
31.9198
536.0383
1147.0000
1096.0000
50.7569
289.1194
323.9168
313.0810
14.2677
Table 42. Statistics of Fit
Variable
Description
PYPRFMX
BRUDCMX
BRSPRMX
BRSMTMX
Poultry Producer Price
Broiler Consumption
Broiler Production
Broiler Imports
Mean
Error
Mean %
Error
Mean Abs
Error
Mean Abs %
Error
-8.2835
-7.2443
1.9079
-10.6976
-2.9550
1.7576
2.1626
5.4975
70.7852
77.9552
74.0822
21.1924
12.1074
8.5201
8.4538
41.4729
Table 43. MSE Decomposition Proportions Inequality Coefficients
Variable
Description
MSE
Corr
(R)
Bias
(UM)
Var
(US)
Cov
(UC)
PYPRFMX
BRUDCMX
BRSPRMX
BRSMTMX
Poultry Producer Price
Broiler Consumption
Broiler Production
Broiler Imports
7797
8775
8051
653
0.9510
0.9660
0.9600
0.6910
0.0090
0.0060
0.0000
0.1750
0.1590
0.1660
0.0490
0.4340
0.8320
0.8280
0.9500
0.3910
42 Barrett and Fabiosa
Table 44. Theil Forecast Error Statistics
Variable
Description
PYPRFMX
BRUDCMX
BRSPRMX
BRSMTMX
Poultry Producer Price
Broiler Consumption
Broiler Production
Broiler Imports
U1
U
0.1484
0.0777
0.0787
0.3727
0.0737
0.0391
0.0394
0.2110
Elasticity Tables
Table 45. Meat Demand Elasticity in Mexico
Beef
Pork
Broiler
Beef
Price Elasticity
Pork
Broiler
Income
Elasticity
-0.3500
0.1300
0.2000
0.1000
-0.2500
0.1500
0.1500
0.0800
-0.4000
0.6265
0.3300
1.0000
Table 46. Meat Supply Elasticity in Mexico
Dependent Variables
Price/Feed Price Ratio
Cattle-Beef Model
Cow Slaughter
Other Cattle Slaughter
Calf Slaughter
Beef Cow Inventory
Swine-Pork Model
Slaughter Weight
Swine Slaughter
Sow Ending Inventory
Broiler Model
Broiler Production
0.7409
0.2000
0.1254
0.3000
Real Beef Price
Real Milk Price
-0.2167
0.1500
-0.0382
0.1351
0.2140
-0.1000
Lag Dependent
0.2740
0.2143
A Policy Model for Mexico’s Livestock and Poultry Sectors 43
Table 47. Trade Elasticity in Mexico
Dependent Variables
Cattle-Beef Model
Cattle Imports
Cattle Exports
Beef Import
Beef Export
Swine-Pork Model
Pork Export
Pork Import
Swine Imports
Poultry Model
Broiler Import
Independent Variables
Price Ratio
Lag Dependent Variable
2.0000
-0.9000
1.3000
-1.6000
-1.3500
1.5000
1.4500
0.9500
0.5000
44 Barrett and Fabiosa
Table 48. FAPRI Baseline Projections for Mexico (1988-1997)
Mexican Meat Supply and Utilization
Cattle Inventories (Beg.)
Hog Inventories (Beg.)
Net Trade (Live Animals)
Cattle
Hog
Beef and Veal
Production
Consumption
1988
1989
35.38
10.88
35
9
609
-84
1990
1991
1992
1993
1994
1995
1996
1997
(Million Head)
31.75 29.85
8.56
8.59
30.23
9.93
30.65
11.3
30.7
12.08
30.19
12.51
28.14
11.1
26.9
10.2
(Thousand Head)
744
1198
815
-80
-50
-265
713
-120
1197
-35
943
-130
1633
-5
260
-38
350
-40
(Thousand Metric Tons)
1790
1580
1660
1845
1696
1789
1710
1805
1810
1899
1850
1890
1800
1898
1800
1935
1754
1769
2140
2176
Net Trade
-15
-36
-55
-116
-129
-95
-89
-40
-98
-135
Pork
Production
Consumption
964
980
910
937
792
809
820
859
830
881
870
917
900
978
954
1011
895
923
900
928
Net Trade
-16
-27
-17
-39
-51
-47
-78
-57
-28
-28
Broiler
Production
Consumption
808
858
873
916
945
979
1178
1233
1346
1415
1364
1451
1383
1485
1435
1529
1478
1581
1550
1668
Net Trade
-50
-43
-34
-55
-69
-87
-102
-94
-103
-118
(Peso Per 100 kg)
441.96 505.45 619.52 794.55 839.37
444.31 445.94 557.74 652.12 620.05
417
542
626
647
522
835
730
597
813
670
602
(Kilogram, Carcass Weight Basis)
22.71 20.38 21.07 20.84
9.96 10.32 10.38 10.59
12.05 14.82 16.67 16.75
44.71 45.53 48.11 48.18
21.48
11.06
16.80
49.34
Producer Prices
Beef and Veal
Pork
Poultry
Per Capita Consumption
Mexico
Beef
Pork
Broiler
Total
22.68
12.56
11.00
46.24
27.37
11.79
11.52
50.68
1058 1459.40 1678.30
965 1426.10 1611.40
717 1031.50 1010.90
20.74
11.10
16.78
48.62
20.40
9.92
16.99
47.32
20.42
9.79
17.60
47.81
A Policy Model for Mexico’s Livestock and Poultry Sectors 45
Table 49. FAPRI Baseline Projections for Mexico (1998-2007)
Mexican Meat Supply and Utilization
1998
Cattle Inventories (Beg.)
Hog Inventories (Beg.)
Net Trade (Live Animals)
Cattle
Hog
1999
2000
2001
2002
2003
2004
2005
2006
2007
25.63
9.97
(Million Head)
25.85 25.63
9.81
9.81
25.3
9.82
24.99
9.94
24.82
9.97
24.49
9.87
24.04
9.74
23.58
9.65
23.12
9.52
124
-56
(Thousand Head)
543
711
-52
-51
673
-55
556
-61
564
-62
570
-66
518
-75
486
-85
450
-90
(Thousand Metric Tons)
1802
1800
1788
1970
1980
1996
1772
2013
1783
2058
1783
2099
1769
2137
1752
2159
1733
2183
Beef and Veal
Production
Consumption
1780
1949
Net Trade
-169
-167
-180
-208
-241
-275
-316
-368
-406
-450
Pork
Production
Consumption
930
950
981
986
1027
1026
1055
1060
1083
1097
1115
1129
1148
1165
1180
1212
1217
1267
1260
1317
Net Trade
-20
-5
1
-5
-14
-14
-17
-32
-50
-57
Broiler
Production
Consumption
1620
1745
1664
1814
1717
1886
1742
1933
1811
2020
1867
2086
1933
2166
2008
2256
2102
2370
2216
2504
Net Trade
-125
-150
-169
-190
-208
-219
-233
-248
-267
-288
Producer Prices
Beef and Veal
Pork
Poultry
Per Capita Consumption
Mexico
Beef
Pork
Broiler
Total
(Peso Per 100 kg)
1887.9 2044.5 2349.1
2538 2741.2 2943.1 3206.9 3506.7
3938 4468.7
1759 1829.7 2008.4 2105.9 2245.2 2470.5 2752.6 3041.6 3409.6 3926.8
1152.9 1176.9 1277.9 1331.4 1354.2 1429.4 1519.5 1612.6 1725.3 1862.4
20.2
9.84
18.08
48.12
(Kilogram, Carcass Weight Basis)
20.05
19.8 19.63 19.47
10.03 10.26 10.42 10.61
18.46 18.87 19.01 19.53
48.55 48.94 49.06 49.61
19.58
10.74
19.85
50.17
19.66
10.91
20.28
50.85
19.7
11.18
20.8
51.67
19.6
11.51
21.52
52.62
19.53
11.79
22.4
53.72
46 Barrett and Fabiosa
Cow
S laughter
L iveweight
Cow
Milk
Production
S teer/Heifer
S laughter
Liveweight
S teer/Heifer
Liveweight
B eef
Production
Calf
S laughter
Liveweight
Calf
Breeding
Inventory
B reeding
Addition
Death
S teer/Heifer
Inventory
Calf
Crop
E xport
Import
Live Inventory and Production Block: Cattle-Beef Model
Figure 1. Cattle-Beef Model Illustration
Cow
S laughter
Import
S teer/Heifer
S laughter
Carcas s
Weight
B eef
Production
Beef
S upply
B eginning
S tocks
Calf
S laughter
Meat Supply Block: Beef Model
Figure 2. Beef Model Illustration
E xport
B eef
Dis appearance
E nding
S tocks
A Policy Model for Mexico’s Livestock and Poultry Sectors 47
Breeding
Inventory
S ow
S laughter
L iveweight
S ow
Gilt/Barrow
S laughter
Liveweight
Gilt/Barrow
B reeding
Addition
Death
Liveweight
Pork
Production
Gilt/B arrow
Inventory
Pig
Crop
E xport
Import
Live Inventory and Production Block: Swine-Pork Model
Figure 3. Swine-Pork Model Illustration
S ow
S laughter
Import
Carcas s
Weight
Pork
Production
Gilt/Barrow
S laughter
Pork
S upply
B eginning
S tocks
Meat Supply Block: Pork Model
Figure 4. Pork Model Illustration
E xport
Pork
Dis appearance
E nding
S tocks
48 Barrett and Fabiosa
A Policy Model for Mexico’s Livestock and Poultry Sectors 49
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Bierlen, Ralph and Dermot Hayes. 1994. The Economics of Market in Meat in Mexico.
In Meat Marketing in Mexico: A Guide for U.S. Meat Exporting
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(MATRIC), Iowa State University.
Food and Agricultural Policy Research Institute (FAPRI). 1998. World Agricultural
Outlook. Ames: FAPRI, Iowa State University.
Hadwiger, Donald and Yong Lee. 1994. The Political Environment for Agricultural
Policymaking in Mexico. In Meat Marketing in Mexico: A Guide for U.S.
Meat Exporting Companies. Ames: Midwest Agribusiness Trade Research and
Information Center (MATRIC), Iowa State University.
U.S. Department of Agriculture. Economic Research Service (USDA/ERS) 1997.
NAFTA Situation and Outlook Series. WRS-97-2. Washington, D.C.:
USDA/ERS.
. 1996 NAFTA: Year Three. Washington, D.C.: USDA/ERS.
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U.S. Department of Agriculture. Foreign Agriculture Service (USDA/FAS) 1997a.
Mexico Livestock Annual. Attaché Report, Agr Number MX7074. Washington,
D.C.: USDA/FAS.
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MX7621. Washington, D.C.: USDA/FAS.
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MX7635. Washington, D.C.: USDA/FAS.